Cell Therapeutics, Inc. to Pay United States $10.5 Million
to Resolve Claims for Illegal Marketing of Cancer Drug

WASHINGTON – Cell Therapeutics Inc. (CTI) of Seattle, Wash., has agreed to pay
the United States $10.5 million to resolve allegations of the company’s illegal
marketing of the anti-cancer prescription drug Trisenox, the Justice Department
announced today. According to the government’s complaint, CTI promoted the drug
for various uses that were unapproved by the Food & Drug Administration (FDA).

The alleged “off-label” uses caused doctors to prescribe Trisenox to treat
various forms of cancer for which the drug was neither approved by the FDA nor
proven to be either safe or effective. The government’s suit alleged that
because of the company’s actions, physicians who prescribed Trisenox
“off-label” unwittingly submitted false claims for reimbursement to the
Medicare program from 2001 until 2005. In 2005, CTI sold Trisenox to another
company and the drug’s new owner halted CTI’s misleading off-label promotion
campaign.

“Cell Therapeutics essentially subverted a regulatory system designed to assure
that patients receive only those drugs that have been proven to be effective
for their illness,” said Peter D. Keisler, Assistant Attorney General for the
Justice Department’s Civil Division.

Under the rules in effect at the time of the conduct in question, the complaint
asserts that Medicare paid only for anti-cancer drugs when prescribed for
FDA-approved uses or uses that were determined to be medically accepted as
published in certain specific pharmacological texts known collectively as the
“compendia.” The government alleges that CTI knew that Trisenox was
FDA-approved for only one type of cancer and was not listed as a medically
accepted treatment in the compendia for any other condition. Nevertheless, the
complaint states that CTI falsely marketed the drug to doctors by suggesting
that Trisenox was FDA-approved and listed as medically accepted in the
compendia for other types of cancers.

“Cell Therapeutics enriched itself at taxpayer expense by aggressively
marketing this drug to doctors for use in treating certain types of cancers
even though the company knew that the drug had no proven medical benefit in the
treatment of those cancers and had not been approved by the FDA for those uses,”
said Jeffrey C. Sullivan, U.S. Attorney for the Western District of Washington.

In addition, the government’s complaint alleges CTI used illegal kickbacks to
induce physicians to prescribe Trisenox. Under sham “consulting agreements”
physicians were paid $500-$1,000 to attend dinners or conferences on the
off-label uses of Trisenox. These meetings were held at expensive resorts and
restaurants. Doctors who wrote large numbers of prescriptions for Trisenox for
off-label uses were asked to speak at various events for additional financial
bonuses.